From Red Flag to Resolution: Insuring a Critical Tax Risk

Castle Harbour helped preserve deal momentum by identifying and insuring a material tax risk that threatened the target’s S-corporation status, avoiding retroactive tax liabilities.

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Castle Harbour was engaged on a transaction where a material tax issue threatened to derail the deal: the target company’s tax efficient S-corporation status was at risk of being retroactively invalidated, potentially triggering significant unforeseen tax liabilities. Castle Harbour quickly identified the exposure during diligence and mobilized its internal tax specialists to assess the severity and structure a clear narrative for underwriters.

Through a coordinated effort with counsel, advisors, and Tax Insurance markets, tax insurance was successfully placed on the identified tax risk. By converting a potential deal-breaker into an insurable exposure, Castle Harbour preserved full deal momentum and provided the buyer with critical protection and peace of mind.

Policy type: Buyer-side RWI
Size: $500MM - $1B
Sector: Logistics

Buyer type: Financial Sponsor
Buyer jurisdiction: U.S.
Seller jurisdiction: U.S.